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By Leng Cheng / Mar 06, 2019 06:45 AM / Finance

Export-Import Bank of China Chairwoman Hu Xiaolian. Photo: VCG

Export-Import Bank of China Chairwoman Hu Xiaolian. Photo: VCG

While much of the talk at this year’s “Two Sessions” in Beijing centers on getting more funds to businesses, financial risk containment is still making headlines. Hu Xiaolian, chairman of policy lender Export-Import Bank of China, used her podium at the gathering to talk up the importance of preventing corporate liquidity risk from spreading among different products and sectors.

Hu made her proposal during a group discussion Tuesday at this year’s Chinese People's Political Consultative Conference, flagging the potential for contagion and cross-sector damage from rising defaults of some cash-strapped companies.

“For example, if a company defaults on securities or a trust product, its other obligations will receive a high degree of attention from financial institutions,” she said. “And it’s very likely that all the institutions will tighten (their financing) after the problems occur.” But she argued that some companies’ asset quality may still be good even in the face of such defaults, and ongoing projects might remain viable.

“Regulators should introduce related policies so that risks in different funding channels and financial markets can be effectively blocked to prevent the cross-sector contagion,” Hu said.

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